How a 10-year SIP can fund your child’s education without loans; check options

With education costs rising sharply, especially for international studies and elite private schools in India, financial experts are urging parents to plan early. A structured investment strategy such as a step-up Systematic Investment Plan (SIP) can not only cover school and college fees but also leave behind a sizeable corpus for a child’s future.

CA Nitin Kaushik, in a widely shared post on X, highlighted how “99% of parents burn lakhs on school fees without a plan.” He argued that a 10-year SIP strategy could fully fund education “almost free” and still leave wealth for children’s long-term aspirations.

Planning matters

Education costs have been rising faster than overall inflation. Elite private schools in metro cities often charge Rs 4–5 lakh per year for higher grades, while tier-2 city schools cost between Rs 60,000 and Rs 1.5 lakh annually. Education inflation runs between 6–12% per year, compared with general consumer inflation of 5–6%.

Without a long-term plan, these costs can outpace savings, forcing families into debt or last-minute borrowing.

SIP strategy

Kaushik illustrates how a step-up SIP can create a self-sustaining education fund:

Start with a Rs 10,000 monthly SIP.

Increase the contribution by 10% each year for 10 years.

Stop fresh investments after 10 years.

From the child’s age of 10 to 22, withdraw ₹25,000 per month to cover fees.

Assume a 12% annual CAGR from equity funds.

The math

Total invested over 10 years: Rs 19.12 lakh

Corpus at year 10: Rs 32.69 lakh

Withdrawals over 12 years: Rs 36 lakh (covering school and college fees)

Corpus left at child’s age 22: ~Rs 51 lakh

This outcome is achieved without education loans or salary shocks, purely through disciplined investing and compounding.

No loans

Education loans, though popular, can become a burden. For example, a Rs 36 lakh loan at ~11% interest over 10 years results in an EMI of nearly ₹50,000 per month. In contrast, withdrawals from an SIP strategy cost about Rs 25,000 per month — half the financial strain and far more flexible.

Importantly, the SIP corpus continues to grow even during withdrawals, compounding wealth for the long term.

Step-up SIP

The approach is designed to align with a parent’s career progression:

Year 1: Rs 10,000/month → Rs 1.2 lakh annually

Year 5: Rs 16,600/month → Rs 1.99 lakh annually

Year 10: Rs 23,300/month → Rs 2.8 lakh annually

By gradually increasing contributions alongside promotions and salary hikes, parents can invest painlessly without disrupting household cash flow.

Practical tips

Experts recommend keeping the portfolio disciplined and cost-effective:

Use low-cost equity or index funds for the growth portion.

Park 3–6 months of school fees in liquid funds for emergencies.

Review annually and adjust allocations or step-ups.

Plan extra for one-time expenses such as school donations or admission charges.

The end result

By following this method, parents can ensure that their child’s education is fully funded without financial stress, while eliminating any dependency on costly education loans. The approach not only covers fees through steady, well-aligned cash flows but also leaves behind a residual corpus of over ₹50 lakh by the time the child turns 22. Importantly, the investment continues to generate wealth beyond education needs, creating long-term financial security for the family.

Parents work tirelessly to secure their children’s future. A 10-year step-up SIP shows how smart, disciplined investing can fully fund a child’s education without loans or financial stress. By starting early and letting compounding work, parents not only cover rising school and college costs but also build a sizeable surplus for future needs. The message is simple — plan ahead, stay consistent, and secure your child’s dreams debt-free.